Which of the following is a required characteristic of a Qualified Domestic Trust (QDOT) for estate tax purposes?

• A. The surviving spouse must be a U.S. citizen.
• B. The trust must have at least one trustee who is a U.S. citizen or domestic corporation who can withhold estate tax on distributions of principal.
• C. The trust must prohibit distributions of income to the surviving spouse.
• D. The trust must terminate within 10 years of the decedent's death.

Answer: (B)

A Qualified Domestic Trust is designed to let a noncitizen spouse benefit from the unlimited marital deduction while deferring estate tax until distributions occur. The essential requirement is that there is at least one trustee who is a U.S. citizen or a domestic corporation that has the authority to withhold the estate tax on distributions of principal to the surviving spouse. This withholding authority is what enables the tax to be collected in a controlled way and allows the deferral mechanism to work.

Why this matters: without a U.S. trustee able to withhold, the estate tax on a noncitizen spouse’s share couldn’t be properly secured, undermining the deferral intent of a QDOT. The surviving spouse’s citizenship status isn’t the requirement here—the QDOT is specifically used when the spouse is not a U.S. citizen. Also, there’s no rule prohibiting income distributions to the surviving spouse, and there isn’t a fixed 10-year termination mandate for the trust.